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Asian Trade and Global Linkages




In the run-up to the 2008 global financial crisis, many thought that Asia would be exempt from economic shocks from Europe or North America. These arguments were largely based on the rapid expansion of intraregional trade in Asia. This paper examines the trade linkages among Asian countries and between Asia and other regions, paying particular attention to the role of production sharing processes diversified across geographically diffuse networks. Little or no evidence is found of Asia decoupling from the business cycles of the G-3 economies (United States, European Union, and Japan). Instead, there is a substantial linkage between growth in the G-3 and Asia, particularly since the 1997–1998 Asian financial crisis, because production networks in Asia expanded in response to G-3 demand for final products. The critical factor is the role of the People’s Republic of China as an assembly center in the vertical production integration.

Suggested Citation

  • H. Brooks , Douglas & Hua, Changchun, 2009. "Asian Trade and Global Linkages," Asian Development Review, Asian Development Bank, vol. 26(1), pages 103-128.
  • Handle: RePEc:ris:adbadr:2614

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    References listed on IDEAS

    1. Sebastian Edwards, 2002. "Does the Current Account Matter?," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 21-76 National Bureau of Economic Research, Inc.
    2. Chinn, Menzie D. & Ito, Hiro, 2007. "Current account balances, financial development and institutions: Assaying the world "saving glut"," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 546-569, June.
    3. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
    4. Park, Donghyun & Shin, Kwanho, 2009. "Saving, Investment, and Current Account Surplus in Developing Asia," ADB Economics Working Paper Series 158, Asian Development Bank.
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    Cited by:

    1. Anders C. Johansson, 2012. "China’s Growing Influence in Southeast Asia – Monetary Policy and Equity Markets," The World Economy, Wiley Blackwell, vol. 35(7), pages 816-837, July.
    2. Zhou, Jing & Latorre, María C., 2013. "The impact of FDI on the production networks between China and East Asia and the role of the U.S. and ROW as final markets," MPRA Paper 51384, University Library of Munich, Germany.

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